Ken Ofori-Atta with Abena Osei-Asare (left) and John Kumah, both Deputy Ministers of Finance heading to Parliament for the Mid-Year Budget Review
Minister of Finance, Ken Ofori-Atta, has stated that the economy is back on track to a positive primary balance, stating that provisional data on government fiscal operations for the first half of 2023 show a slower pace of expenditure execution relative to revenue shortfall.
According to him, this has resulted in an overall budget deficit on a commitment basis of GH¢6.3 billion (0.8% of GDP), compared to the 2023 first half budget deficit target of GH¢28.3 billion (3.5% of GDP).
Presenting the mid-year fiscal policy review of the 2023 Budget Statement and Economic Policy of the Government, the minister said the data on the economy indicated a corresponding primary balance (on commitment basis) of a surplus of GH¢8.8 billion (1.1% of GDP), compared to the target of a surplus of GH¢310 million.
He noted that the overall cash deficit of GH¢10.3 billion (1.3% of GDP) was also posted as against the first half of 2023 budget target of GH¢35,494 million (4.4% of GDP), and added that it also showed a corresponding primary balance (on cash basis) of a surplus of GH¢4,804 million (0.6% of GDP), against the first half of 2023 deficit target of GH¢6,908 million (0.9% of GDP).
Mr. Ofori-Atta said there was a consensus that “we are turning the corner” and pointed out that available data indicated that overall first quarter growth for 2023 was 4.2 percent, up from 3.0 percent recorded for the same period in 2022.
“This growth largely reflected an increase in the Services Sector which recorded a growth of 10.1 percent and headline inflation eased in the first half of 2023,” he added.
The Finance Minister continued that from the peak at 54.1 percent in December 2022, headline inflation gradually trended downwards from 53.6 percent in January 2023 to 42.5 percent in June 2023.
The moderation in inflation, he explained, was largely supported by monetary policy tightening, relative stability in the exchange rate and lower and stable ex-pump petroleum prices.
According to him, cumulatively, the Ghana Cedi depreciated by 22.1 percent against the US dollar in the year to July 17, 2023, compared to 21.1 percent in the same period in 2022.
“The Cedi, excluding the January, 2023 depreciation of 20%, has depreciated by an impressive 1.84% between February and July 17, 2023. Total export receipts fell by 7.9 percent to US$8,178.56 million on the back of lower crude oil exports receipts,” he revealed.
The minister said crude oil exports declined by 41.3 percent year-on-year due to a 21.4 percent decline in volumes and 25.3 percent fall in prices.
“Current account recorded a provisional surplus of US$849.16 million (1.1% of GDP) compared with a deficit of US$1,111.87 million (1.5% of GDP) for the same period in 2022,” Mr. Ofori-Atta stated.
“Gross International Reserves dropped from US$6.2 billion at the end of December 2023 to US$5.3 billion (2.5 months of import cover) in June 2023, reflecting BoG’s objectives of reducing their foreign liabilities in line with the IMF programme,” he said.
The minister indicated that the Net International Reserves received a boost from gold reserves and improved to US$2,353.95 million equivalent to 1.1 months of import cover, compared with US$1,440.00 million (0.6 months of import cover) recorded at the end of December 2022.
… As Minority Cries Foul
Meanwhile, the Minority Leader, Dr. Cassiel Ato Forson, has stated that the government has exacerbated Ghanaians’ troubles for the past six months, alleging that evidence contradicts the Finance Minister’s declaration that the government has “turned the corner.”
Responding to Mr. Ofori-Atta’s presentation of the 2023 Mid-Year Budget Review in Parliament yesterday, the Minority Leader stated that the Ghana Cedi’s stability was due to the government’s failure to pay its external debt.
He contended that the economic growth has been lowered downward from 2.8% of GDP to 1.5% of GDP, indicating a slower recovery than previously projected.
“The Minister said we have turned the corner. Unfortunately, the evidence and the numbers before us, show us that he has rather deepened our woes,” Dr. Forson asserted.
“I say this because he has said to us today that he’s revising economic growth from 2.8% of GDP to 1.5% of GDP. Again, he said to us here and now that he has borrowed GH¢5.5 billion from January to June, from the T-Bill market.
“Mr. Speaker, not long ago, this same Minister informed us that he won’t borrow at all in the year 2023. And that going into the remaining parts of the year, he is going to borrow another GH¢ 41 billion,” he intimated.
“Aside from that, the Cedi depreciation we are seeing so far, it’s largely because we have defaulted in the payment of external interest and principal. That is why the Cedi has depreciated,” he pointed out.
By Ernest Kofi Adu, Parliament House